Senators must work to bring back sponsors: experts

The Ottawa Senators have some work to do to bring back sponsorship dollars now that the National Hockey League and its players have reached a tentative deal to end the league’s 113-day lockout, one observer said Monday.

(File photo)

Howard Bloom, the Ottawa-based publisher of SportsBusinessNews.com, believes the damage done by the lockout has put sponsors “in a good position” for negotiating with the team.

The team has already reached out to ticket buyers to ask them what initiatives they’d need to see to be lured back following the delayed start. Season ticket holders were asked whether initiatives such as free parking and reduced food prices would help bring them back.

The Senators would be well-advised to do something similar with its sponsors, said Mr. Bloom. He doesn’t think it’s very likely that sponsors will get a discount on their advertising but he says that giving out free tickets and suites would go a long way to easing the pain.

“The sponsors have to work closely with the Senators on whatever plans the Senators have to bring back the brand and the games,” said Mr. Bloom. “The Senators have traditionally shown a tremendous understanding of taking care of the fans, and I’m sure they’re going to take care of their sponsors.”

Brian Morris, a spokesman for the Senators, declined to comment on initiatives that would be put in place for sponsors until the tentative agreement reached over the weekend is finalized.

Mr. Bloom said he expected the fans would come back in droves once the puck is dropped for a reduced schedule, meaning he doesn’t think there will be reduced value for those forking over sponsorship dollars.

The Senators depend on local companies for sponsorship dollars more than in other cities, said Mr. Bloom. That’s because Ottawa doesn’t have the same number of corporate headquarters as cities such as Montreal and Toronto.

Edgar Baum, managing director of Brand Finance in Canada, said some corporate sponsors will avoid the league, while it could take others 18 to 26 months before the come back to the NHL.

And for those that do stay with the league and the various teams, Baum said they will look to make changes.

"They are going to have their sponsorship programs expire at the same time as the collective bargaining agreement between the NHL and NHLPA," he said.

In October, Brand Finance estimated the brand value of the NHL and its teams was down nearly half a billion dollars at $1.15 billion.

``When we go and take a look at the numbers again we're going to reinforce a large chunk of that loss,'' he said.

Baum said Monday that figure will almost certainly head lower with the recent labour strife even with the tentative labour deal.

Bruno Delorme, who teaches sports management at McGill University and Marianopolis College in Montreal, said the league must first work to reassure and hold on to the sponsors it already has before it can start working to add new ones.

"Perhaps we could see them offer them credit of some sort, additional publicity or visibility rights for the same price, maybe a refund of part of the sponsorship dollars," he said.

Prior to reaching the tentative agreement on Sunday morning, the NHL was on the verge of cancelling a second season due to a work stoppage. The two sides were working against the clock after NHL commissioner Gary Bettman set a deadline of Jan. 11 to get a deal done to save a shortened season, which is expected to start between Jan. 15 and Jan. 19.

A key issue for players was the pension plan, which was eventually settled when the sides came to an understanding on how they would account for the future financial liability. That might be the biggest win for the players in a deal where they are seeing their share in revenue reduced to 50 per cent from a system where they received 57 per cent.

The NHL Players’ Association also held firm on a 2013-14 salary cap of US$64.3 million - the same level where it sat last year - and the league was willing to oblige since the players agreed to parameters that should limit front-loaded, back-diving contracts. A term limit of seven years was agreed to for free agents (teams can sign their own players for up to eight years), while a 35 per cent yearly variance in salary was put in place.

Under the new collective bargaining agreement, no contract can include more than a 50 per cent difference in pay between any two seasons.

The agreement will run over 10 years through 2021-22, with an opt-out option after eight seasons.

The lockout will cost the league between 480 and 510 regular-season games, depending on whether there is a 48- or 50-game season, but the most important number probably won't be revealed for at least 18 months. The NHL was coming off seven years of record revenues when the last CBA expired, hitting a high-water mark of $3.3 billion last season.